STEVENS, V. C.
In the matter of the receivership of the Stevens & Condit Transportation Company, an insolvent corporation. From an allowance of claims by the receiver against it in favor of the Lehigh & Wjlkesbarre Company, the insolvent appeals. Dismissed.
Robert L. Lawrence, for claimant.
R. Wayne Parker, for contestant.
STEVENS, V. C. The sole question in this case is whether a person having a claim for a tort committed by an insolvent corporation, which claim arose before the company was declared insolvent, but was not reduced to judgment until after, can come in and share on an equality with the other creditors. In Rosenbaum v. Credit System Co., 61 N. J. Law, 544, 40 Atl. 591, it was authoritatively decided that claims for unliquidated damages growing out of breaches of contract may be proved before the receiver, and that the claimants stand on an equality with other creditors in the distribution of the company's assets. In the opinion in the court of errors it is said: "The general scheme of the statutes contemplates the ascertainment and payment of all just claims against the corporation. The terms 'creditor' and 'debtor' are not used in a narrow, restricted, or technical sense. By its provision for reference of a claim to a Jury the machinery whereby the amounts of claims sounding in unliquidated damages may be ascertained is provided, and such claims are brought within the term 'debts.'" This language, taken literally, is broad enough to include torts. But as the cause of action there arose out of breach of contract, the decision is not conclusive. Indeed, the principal ground upon which the court of errors based its conclusion, viz., that those who dealt with the corporation did so in view of "the trust fund" which its capital provided, and ought, therefore, to be permitted to share in that fund, is here wanting. But I think that on another ground claims sounding in tort, after adjudication or allowance, are entitled to a proportionate share. In section 75 of the corporations act (P. L. 1896, p. 301) it is provided that the court may limit the time within which creditors shall make proof of their claims, "and may bar all creditors and claimants falling so to do within the time limited," etc. While it may be argued that the word "creditor" is inapplicable to one who has nothing but a claim sounding in tort, it cannot be asserted that the word "claimant" is not broad enough to include him. In section 76 the statutory language is that "every claim against an insolvent corporation shall be presented to the receiver in writing and upon oath, and the claimant if required, shall submit himself to such examination in relation to the claim as the receiver shall direct." This section, which is the most significant and important of all, because it deals directly with the very subject we are considering,—the subject of claims that may be presented to a receiver,—uses language which is just as applicable to claims for tort as to claims upon contract Section 77 (page 302) provides that "any creditor or claimant who shall lay his claim before such receivermay at the same time demand that a jury shall decide thereon." This section shows that it is not only the claim of a "creditor," technically so called, that may be submitted to a jury, but the claim of any "claimant." When it is considered that there is no class of claims that may so properly be laid before a jury as claims sounding in tort, no class which the policy of our law so invariably lays before a jury, the significance of this section is apparent. To cut down the generality of the language by excepting out of the whole class of claimants denominated by that section this very important class is only permissible if legislative authority for it can be found in some other provision of the act. It is contended that section 86, which provides for distribution, furnishes the authority. The direction is that, after payment of all allowances, expenses, and costs, and the satisfaction of all special and general liens, "the creditors shall be paid proportionately to the amount of their respective debts * * * and * * * shall be entitled to distribution on debts not due, making in such case a rebate of interest" The argument is that claims for torts, not being debts, cannot, under the provisions of this section, share in the distribution on an equality with creditors. But if they cannot share on an equality they cannot share at all, for the explicit direction is (1) that the creditors shall be paid proportionally to the amount of their respective debts, and (2) that the surplus funds, if any, after payment of the creditors and the costs, expenses, and allowances, shall go to the stockholders. If the claimant is not a creditor within the meaning of this section, he can get nothing. The surplus after creditors are paid goes—all of it—to stockholders. In bankruptcy, claims not provable continue to be enforceable against the bankrupt. In proceedings against insolvent corporations, the company, except in the very insignificant class of cases in which it resumes business, is wound up, and all remedy against it gone. This being the situation, are we to assume without necessity that the legislature, after providing that creditors and claimants might lay their claims before a receiver, and demand a jury, intended, in the distribution, to exclude a meritorious class of creditors, who, in terms at least, come within the express words of sections 75-77? Section 80 does not require this assumption. After a claim for unliquidated damages has been reduced to judgment, it becomes a debt. It is, in the books, characterized as a debt of record, for which, at common law, an action of debt lay. Nothing is better settled than that a corporation is not dissolved by a mere adjudication of insolvency. Suits against it, after such adjudication, may still be prosecuted to judgment Indeed, the statute (section 53) provides that they may be prosecuted after dissolution. There is nothing in the act itself to indicate that the claim must be, in the technical sense, a debt at the time of the filing of the bill or of the adjudication of insolvency. Is it not then reasonable to conclude that if such claims, either by adjudication of a common-law tribunal or by adjudication of the receiver, become debts before the time of distribution, they may share in the fund? This construction of the act makes it one harmonious whole. The other does injustice, and, besides, does violence to the ordinary meaning of words. The whole argument rests upon the idea that the claims must be debts at some fixed period anterior to distribution. But what section of the act can be pointed to as justifying this idea? I can find none. Decisions under the bankrupt act of 1867 are inapplicable, for the reason that section 5067, Rev. St. U. S., not only specified the kind of debt or demand that might be proved, but also declared that only such debts were provable as existed at the time of the commencement of proceedings in bankruptcy.
I think the appeal from the allowance by the receiver of the claims in question should be dismissed.